What would mega-merger between airlines mean?

April 30, 2010 7:34:15 PM PDT
A merger between Continental and United Airlines would likely mean big changes for the traveling public and airline employees. The board of UAL, United's parent company was to meet in Chicago on Friday. United won't say if that meeting happened and whether anything significant came from the meeting. We do know United and Continental are as close as they've been in years to pulling the trigger on what could be a $3.2 billion merger.

At Chicago's O'Hare Airport, it's business as usual despite the negotiations that could create the largest airline in the world.

"I heard about it, but I didn't pay too much attention to it," said traveler Meghann Autman.

Autman was flying from Chicago through Houston Friday to Cancun. She fears the merger, thinking that ticket prices could skyrocket.

"If tickets go up, I won't fly with them," she said.

Experts say that could happen as the merger would decrease competition, combining the existing No. 5 airline in Continental with No. 3 airline in United.

Published reports quote sources close to negotiations saying the merger would result in an airline still called United, but one headquartered in Chicago, not in Houston. Word is Continental's CEO Jeff Smisek would be the new CEO and United's CEO Glen Tilton would be chairman.

"What's looking like may emerge here is a true merger," said Joe Schwieterman of DePaul University. "The best of both companies come together."

Schwieterman says the merger would be significant, likely bringing several thousand Continental managers to Chicago.

Analysts like Schwieterman say it's a good time for the airline merger. After years of heavy losses and steep cost-cutting, companies are looking for continued ways to reduce expenses. United is in much better financial condition than it was two years ago when Continental pulled out of merger talks at the 11th hour.

"These airlines really fit together like a glove," said Schwieterman. "It's a great strategic position."

This is by no means a done deal. There is still work to be done between now and Monday. But that is when we are hearing a deal could be announced. Continental's board is scheduled to vote on approving the deal Sunday.

Eyewitness News will be in Chicago to bring you the latest details in this developing story.


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